11 January, 2018
The UK and China have agreed a raft of new commercial, financial and trade deals after a weekend of talks in Beijing designed to strengthen the cooperation between the two countries.
The 9th UK-China Economic and Financial Dialogue saw agreement over £1.4 billion worth of commercial deals, work on an initiative connecting the London and Shanghai stock exchanges, and developments in the UK's support of China's 'belt and road' infrastructure initiative, which is also known as one belt, one road.
Former HSBC chair Douglas Flint was announced as the chancellor of the exchequer's City envoy to the belt and road initiative and the government said a City expert board would be established to bring together infrastructure finance, professional and emerging market expertise. Standard Chartered Bank has also announced its support for the belt and road initiative by committing to facilitate financing to the value of at least $20 billion (£14.9bn) by 2020.
UK Export Finance said it would provide up to £25bn of capacity to support new business in belt and road countries in Asia. The UK and China will also identify specific projects to act as pathfinders for UK and Chinese collaboration, and to conduct research on mechanisms to support private sector financing of infrastructure development across the belt and road area.
The two countries said preparations for the London-Shanghai Stock Connect initiative, under which investors in each country will be able to trade shares listed on the other’s stock exchange, are to be accelerated. There was an agreement to launch a working group and feasibility study for establishing a UK-China bond market connect, and there will be a feasibility study on the mutual recognition of funds.
The event hosted the inaugural meeting of a new UK-China Trade Working Group and several trade deals were announced. These included a joint venture between technology companies Smiths Interconnect and Huafeng to work on products for high speed rail and commercial aviation; the establishment of UK fintech firm World First’s office and wholly foreign owned enterprise in Shanghai; and a partnership agreement between Tsinghua X-lab and Future Planet Capital to invest in innovative companies.
Science, technology and innovation were also discussed with the aim of improving cooperation between the governments and businesses in the two countries.
The UK government has been pursuing closer links with China for some time with Chinese investors encouraged to bid for infrastructure projects in the UK as well as deals in the opposite direction. Last year Hong Kong-based infrastructure expert Vincent Connor of Pinsent Masons, the law firm behind Out-Law.com, noted that UK infrastructure could be a more attractive option for Chinese investors after the withdrawal from the European Union in 2019.
“We do not foresee investment outbound from China to the UK in infrastructure and energy slowing down, given the strong fundamentals which remain in place. In fact, there may be additional opportunities for Chinese investors," Connor said.
For further information, please contact:
Vincent Connor, Partner, Pinsent Masons
vincent.connor@pinsentmasons.com
